Puddick v Dyamond Developments Pty Ltd [2019] NSWSC 431

Puddick v Dyamond Developments Pty Ltd [2019] NSWSC 431

The Court accepted Justin's and John's evidence and found that each paid $100,000 into Dyamond's account under express oral agreements with George that the money would be used only to obtain interests in the proposed Gravity Consulting pre-IPO. The plaintiffs did not authorise discretionary securities trading. Once the pre-IPO failed, Dyamond held the monies on a Quistclose trust for the plaintiffs and, having applied the monies for unauthorised purposes, was liable to pay equitable compensation. George was also directly liable because the plaintiffs reposed their trust in him personally and he used Dyamond as the receptacle for the funds; alternatively he had actual knowledge of...

Jurisdiction
Australia
Judgment Date
18 April 2019
Procedural Posture
Equity Proceedings Concerning Alleged Quistclose Trust, Breach of Trust, Accessorial Liability and Tracing / Principal Judgment After Hearing on Liability; Further Orders and Tracing Issues Reserved
Outcome
Liability determined substantially in favour of the plaintiffs against Dyamond and George; tracing and final form of orders reserved; plaintiffs entitled to costs to date from the defendants subject to submissions as to basis.
Legal Topics
['resulting Trusts' 'quistclose Trusts' 'breach of Trust' 'misappropriation of Trust Property' 'knowing Assistance' 'equitable Compensation' 'tracing' 'freezing Orders']
['equity' 'trusts and Trustees'] ['resulting Trusts' 'quistclose Trusts' 'breach of Trust' 'misappropriation of Trust Property' 'knowing Assistance' 'equitable Compensation' 'tracing' 'freezing Orders']

Case Brief

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Procedural Posture

Equity Proceedings Concerning Alleged Quistclose Trust, Breach of Trust, Accessorial Liability and Tracing / Principal Judgment After Hearing on Liability; Further Orders and Tracing Issues Reserved

Legal Issues

  1. 1 ['Whether the plaintiffs paid their $100,000 amounts solely for investment in the proposed Gravity Consulting pre-IPO or also authorised trading in securities pending that investment.' "Whether Dyamond held the plaintiffs' monies on trust and was liable to repay or compensate the plaintiffs when the pre-IPO failed." "Whether George was personally liable as the person in whom the plaintiffs reposed trust or alternatively for knowing assistance in Dyamond's breach of trust." 'Whether Gaks was liable to account or repay the plaintiffs by reason of receiving PMY shares transferred from Dyamond for nil consideration.']

Ratio Decidendi

The Court accepted Justin's and John's evidence and found that each paid $100,000 into Dyamond's account under express oral agreements with George that the money would be used only to obtain interests in the proposed Gravity Consulting pre-IPO. The plaintiffs did not authorise discretionary securities trading. Once the pre-IPO failed, Dyamond held the monies on a Quistclose trust for the plaintiffs and, having applied the monies for unauthorised purposes, was liable to pay equitable compensation. George was also directly liable because the plaintiffs reposed their trust in him personally and he used Dyamond as the receptacle for the funds; alternatively he had actual knowledge of...

Court Disposition

Liability determined substantially in favour of the plaintiffs against Dyamond and George; tracing and final form of orders reserved; plaintiffs entitled to costs to date from the defendants subject to submissions as to basis.

Orders

  • ['The Court will hear the parties on the terms of any appropriate orders to give effect to the reasons for judgment and to make provision for the further conduct of the proceedings.' "Subject to [112], order that the defendants pay the plaintiffs' costs of the proceedings." 'The parties were invited to bring in...